Reporter for The Age

Graduate midwives at Werribee's overrun birthing hospital are among the first casualties of the funding stoush between the state and federal governments and more job losses are expected, the union says.

Australian Nursing Federation Victoria branch secretary Lisa Fitzpatrick said the union understood that Mercy Health at Werribee management had rescinded a verbal offer to eight midwifery graduates, whose 12-month contracts are due to expire on Friday.

"As a result of them thinking they had ongoing employment they haven't been out searching for other midwife jobs and they don't have jobs to go to," Ms Fitzpatrick said.

She said the union feared up to 12 graduate nurses – also on 12-month contracts at Werribee Mercy Hospital – could also be affected.

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Ms Fitzpatrick has sought an urgent meeting with the hospital's administration and criticised it for failing to consult over the job losses.

Ms Fitzpatrick said patients were beginning to feel the effects of the funding cuts. Southern Health has closed four surgery theatres across its Moorabbin and Casey hospitals, but nursing staff are expected to be absorbed into other parts of the hospitals. She estimated 1800 patients would be affected by the theatre closures a year.

On Saturday, the Victorian Healthcare Association, which represents most public hospitals, expected 750 job losses in regional Victorian alone as a result of the state and federal government funding dispute.

Ms Fitzpatrick called on both the state and federal governments to negotiate a settlement over a $107 million funding shortfall saying it was unfair that public hospitals had to absorb the losses over the next seven months.

Ms Fitzpatrick said while the federal government had introduced the cut based on population data, the state government had slashed $616 million from the public hospital system over the last two years.

"I am very disappointed that for some eight weeks now we have the same blaming game from the state and federal governments," Ms Fitzpatrick said.

"There needs to be a compromise and they need to resolve the matter," she said.

Ms Fitzpatrick said Victoria was heading for a nursing and midwife shortfall of at least 25,000 staff by 2025 and the funding stoush could exacerbate the problem if nurses and midwives sought work outside the sector.

Mercy Health has not yet responded to calls from Fairfax Media in relation to the job cuts.